Money problems are one of America’s biggest relationship killers and the third leading cause of divorce. I witnessed this first hand while working in banking, and I can confirm that it’s true. To help you avoid the mistakes I’ve seen time and time again, I came up with this list of the biggest money mistakes couples make.
I can promise you that learning how to spot and avoid these mistakes will help you and your partner create a healthier relationship and improve your financial situation.
And the best part? These mistakes are easy to avoid.
1. Only One of You Does the Finances
This was one of the most common money mistakes I saw while working in banking. One partner was the designated banker, taking care of all the finances, bills, and anything related to money, while the other took a backseat.
This “strategy” may seem to work for some, but it does more harm than good in the long run. Here’s why:
- It creates a big financial knowledge gap between the two of you.
- If you’re in charge of the finances and you fall ill or pass away, your partner will have a very hard time taking over.
- It discourages joint financial decisions and money conversations.
- It can lead to financial abuse. One survey found that 17% of men and 7% of women gave up control of their finances because their partner wanted to control their spending.
It’s almost impossible to maintain a sense of equality in a relationship if only one person is involved in financial management. That’s a one way street to resentment and conflict, and it’s easily avoided.
2. You Don’t Have a Budget
Budgeting as a couple and working towards common goals can save your marriage, as Tim Maurer told Forbes. He lists 10 ways budgeting has helped him and his wife overcome their money issues and brought them closer together.
Not having a common plan for your finances can lead to disagreements and petty arguments about how you spend your money, financial hardship, and leave you unprepared in case of an unexpected life event.
3. ALL Your Accounts Are Joint
While having joint accounts is important in a marriage, you should still have one or two separate accounts. Your motivation for doing this shouldn’t be from a lack of trust, but to give freedom to each other when you need it.
In my experience, having separate accounts is beneficial for three main reasons:
- Having all your accounts joint gets messy in case your marriage ends in divorce. It’s difficult to separate the funds in a joint account, as both of you have equal access to it.
- It eliminates small arguments when someone spends in a way not aligned with your common values or agreed priorities.
- It can allow you to surprise your spouse with gifts.
You’ll need to balance the commitment of resources to joint and individual accounts, but recognize that both of you will need your own accounts.
4. You Don’t Have a Financial Plan
In my experience, couples that have a long-term financial plan in place have a more stable, harmonious relationship. When you don’t have a solid financial plan it’s hard to see the big picture and anticipate how lifestyle changes can affect your financial decisions and your life together.
5. You Don’t Have a Will
This is one of the biggest yet easiest to overlook money mistakes couples make.
If one or both of you passes away unexpectedly, not having a will in place can make life very difficult for the family members left behind. I’ve personally seen this happen a few times, and it’s unfortunate because it can be easily avoided.
Dying without a will means the state decides what happens to your finances and possessions instead of you, and you can lose out on tax benefits. It also means that if you and your partner were not married, they get nothing.
6. You Don’t Talk About Money
Surprisingly enough, one study found that married couples are the ones that talk about money the least out of any couple. This usually happens because it’s easier to avoid uncomfortable conversations about a touchy subject.
Unfortunately, avoiding these talks can lead to bigger problems down the line, including:
- No common financial goals.
- Not being prepared in case of an emergency.
- Missed opportunities to improve your finances.
- Accumulated debt and money worries that could have been avoided.
Communication is the key to strengthening all aspects of a relationship, and finance is no exception.
7. You Hide Your Bad Money Habits
Bad money habits can develop in your relationship and keeping them a secret can drive you apart. Howard Dvorkin, CPA, and chairman of Debt.com said this often happens because partners are ashamed of their toxic habits or because of a lack of trust in their partners.
Hiding bad money habits can include secret debt, an addiction like gambling, uncontrollable spending, or even taking money out of your investments or retirement plans without consulting your partner.
The Bottom Line
There are other money mistakes couples make that could make our list, but these are some of the biggest in my experience. Learning to spot and avoid them will strengthen your relationship, while also improving your finances.
Have we missed anything? What are some of the biggest money mistakes couples make, in your opinion?